Air fares face turbulence as flights slowly restart

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Passengers boarding a flight.

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Air fares are expected to drop as flights resume, then rise by at least 50%, warns a global airline.

Airlines are keen to get planes back to the sky quickly, which could lead to overcapacity, said the International Air Transport Association (Iata).

As passenger demand is expected to remain low, this should encourage carriers to reduce the cost of flights.

But if airlines are forced to leave vacant medium seats, they will have to dramatically increase air fares.

Under the current social distancing proposals, airlines could be required to keep vacant average seats, which would have a major impact on their profitability, as they would be forced to travel with fewer passengers. Ryanair boss Michael O’Leary said keeping the middle seats empty was “silly”.

Iata estimates that only four of the 122 airlines it has sampled would be able to break even under these conditions, resulting in industry consolidation. It is “inevitable” to increase fares to keep carriers commercially viable.

Most airlines are already struggling with the sharp drop in passenger numbers, with the vast majority of their planes immobilized.

Virgin Atlantic announced Tuesday that it will cut more than 3,000 jobs and shut down operations at Gatwick Airport. Virgin Australia entered voluntary administration last month and analysts fear other airlines will follow suit.

“It is difficult to understand how many airlines can operate profitably. It will be a much smaller industry, “said Brian Pearce, chief economist at Iata, on the social distancing proposals on board.

His team contends that social estrangement through vacant middle seats is no guarantee against the spread of coronavirus on planes. Instead, Iata supports the wearing of face masks by passengers for a safer flight.

The glimmer of hope for passengers is that they may see cheaper fares after flights resume as carriers try to boost demand.

Airlines will not be able to raise air fares until the number of passengers is restored, but it will not be until 2021 at the earliest, Iata estimates.

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